Solar Payback Calculator

Solar quotes are usually presented as monthly savings against a monthly loan payment, which is a comparison designed to look good rather than to inform. The number that decides whether a system is a good investment is payback: how many years until the money you did not spend on electricity equals what you spent on the system.

Two things move that number more than anything else. Incentives, which cut the net cost, and rate escalation — the fact that the electricity you are avoiding gets more expensive every year, which shortens payback substantially over a 25-year asset.

Checking a quote against this

Ask the installer for three numbers and put them in above: system price before incentives, the production estimate the offset percentage is based on, and the rate escalation used in their savings projection.

If their escalation assumption is much above your utility's actual history, the projection is doing the work rather than the panels. Utility rate history is public — look up the last ten years and use that.

What breaks the payback

• A tax credit you cannot use. It is a credit, not a refund. Without the liability to absorb it, your net cost is the gross cost.
• Roof work. If the roof needs replacing within ten years, do it first. Removing and reinstalling an array later costs thousands.
• Net metering changes. The rules for what the utility pays for exported power are set by state regulators and have moved unfavourably in several states. Payback assumes today's rules hold.